Mortgages fall for fourth week

Benchmark 30-year loan down to 5.77%

CHICAGO (CBS.MW) -- Mortgage rates continued their improbable up-and-down ride this week, falling for the fourth consecutive time and bringing them closer to modern-day lows than their recent highs of just a month ago.

The benchmark 30-year mortgage dropped for the fourth straight week, down to 5.77 percent from 5.98 percent a week earlier, Freddie Mac said Thursday. The rate is now nearly three-quarters of a percentage point below the recent high of 6.44 percent reached Sept. 4, but still well above the 5.21 percent record low set June 12.

Freddie Mac
FRE, +0.00%
also said the 15-year mortgage, a popular refinancing choice, dropped to 5.1 percent in the week ending Oct. 3, down from 5.3 percent a week earlier.

One-year, Treasury-indexed adjustable-rate mortgages edged down to a national average 3.72 percent from 3.77 percent. All three loans required the payment of an average 0.6 points to achieve the rate. A point is 1 percent of the loan amount, charged as prepaid interest.

"Plummeting consumer confidence in September led markets to believe that the lack of job growth is wearing on the economy," said Frank Nothaft, Freddie Mac chief economist. "That brings about the fear that the lack of growth could trigger another lull in the recovery, causing interest rates to tumble this week."

But Nothaft cautioned that consumers should not get too used to the falling-rate environment.

"We may see a market reaction to the release of September employment numbers due out (Friday.). It could potentially alter the momentum of mortgage-rate change in the near future," he said.

Those wishing to refinance, who have gotten a reprieve of sorts in the last few weeks, were tiptoeing back into the mortgage market this week.

"While the 60 to 70 basis point drop in rates we have seen since mid-July has not been enough to trigger another wave of refinancing, it has nevertheless given some borrowers another chance to take advantage of some very attractive rates," said Jay Brinkmann, MBA's vice president of research and economics.

The refinance share of mortgage activity increased to 53.1 percent of total applications, from 51.9 percent the previous week. At the peak of the refinance boom this summer, refinancing activity accounted for nearly 80 percent of applications. The adjustable-rate mortgage share of activity increased to 23.4 percent from 22.7 percent the previous week.

The average interest rate for 30-year fixed-rate mortgages in the MBA survey decreased to 5.67 percent from 5.85 percent one week earlier, with points decreasing to 1.26 from 1.29 (including the origination fee) for 80 percent loan-to-value ratio loans. The MBA survey covers about 40 percent of the U.S. mortgage market.

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